Supreme Court Flags 24-Year Delay In Execution Of Arbitral Award, Seeks Law Commission Study On Reforms

Expressing concern over the nearly 24-year delay in enforcing an arbitral award, the Supreme Court has asked the Law Commission of India to undertake a focused study on reforming the statutory framework governing the execution of arbitral awards.

A Bench of Justices Vikram Nath, Sandeep Mehta and Aparesh Kumar Singh said the effectiveness of arbitration cannot be assessed only by how quickly an award is rendered or how limited the grounds are for challenging it. It must also be assessed by whether the successful party is able to realise the benefit of the award within a reasonable time.

"The efficacy of an arbitral regime cannot be measured merely by the expedition with which an award is rendered or the circumscribed grounds upon which it may be challenged. It must equally be assessed by the ability of the successful party to realise the fruits of the award within a reasonable time," the Bench said.

Court observed that the promise of arbitration remains unfulfilled if a party, after completing the arbitral process, is forced to undergo another prolonged round of litigation to secure the benefit of the award.

Study on execution of arbitral awards

Court said the Law Commission's study may identify practical impediments to the timely recovery of amounts awarded in arbitration, examine the experience of other jurisdictions and consider whether domestic and foreign arbitral awards require separate enforcement procedures.

It also suggested that the Commission could examine whether a common enforcement framework, with appropriate safeguards, would be more effective.

"The Commission may, upon such examination, make such legislative or procedural recommendations as it considers necessary to strengthen the execution regime and ensure that the enforcement of arbitral awards is commensurate with the objectives of the Arbitration and Conciliation Act, 1996 and India’s commitment to establishing itself as an arbitration-friendly jurisdiction," the Bench said.

Court noted that while the statutory framework has sought to address delays in arbitral proceedings, challenges to awards and stays on enforcement, the actual execution of awards requires equally serious consideration.

Section 36 of the Arbitration and Conciliation Act, 1996 provides that an arbitral award shall be enforced in the same manner as if it were a decree of the court. This brings the ordinary machinery of execution under the Code of Civil Procedure, 1908 into play.

What was the dispute?

The observations came in an appeal filed by M/s Royal Construction Company Pvt Ltd against an interim order passed by the Delhi High Court on February 16, 2026, concerning the execution of a 2002 arbitral award against National Projects Construction Corporation Ltd (NPCC), a Government of India enterprise.

The August 10, 2002 award directed NPCC to pay Royal Construction Company 2,23,777.14 Iraqi Dinars and Rs 20 lakh, both carrying interest at 12% per annum.

The Supreme Court had restored the award in full and, in its October 10, 2023 judgment, held that the amount awarded in foreign currency was payable as such.

During the earlier proceedings, NPCC had deposited around Rs 1.5 crore in Indian currency, which Royal Construction Company withdrew pursuant to orders of the Delhi High Court. During execution proceedings, NPCC contended that the amount deposited had already discharged the principal liability.

Instead of deciding NPCC's pending appeal, the Delhi High Court, through an interim order, granted the parties liberty to seek clarification from the Supreme Court. NPCC also separately filed an application seeking modification of the Supreme Court's 2023 judgment on the same issue.

The Supreme Court, however, declined to entertain the request for clarification or modification.

Execution issues must be decided by executing court

Court held that questions concerning the amounts deposited by NPCC must be decided by the court seized of the execution proceedings and not referred to the Supreme Court for clarification.

It held that the Delhi High Court's division bench had "fallen into error in appreciating the scope of the controversy previously adjudicated by this court".

"This court cannot be called upon, in the guise of seeking clarification, to assume a supervisory role over the continuing execution proceedings or to adjudicate upon every issue that may arise therein. It is for the competent court seized of the execution proceedings, and the appellate court exercising jurisdiction over its orders, to determine the questions arising in accordance with law," the Bench said.

"Once the substantial question of law referred to this court stood answered, the scope of the earlier appellate proceedings stood exhausted," it added.

The Supreme Court accordingly dismissed NPCC's miscellaneous application, while granting it liberty to raise its objections regarding "adjustment or set-off" of the amounts before the executing court in accordance with law.

Noting that the parties were still litigating over enforcement "more than twenty-four years after the arbitral award was rendered", Court requested the Law Commission of India to undertake a focused study of the enforcement and execution of arbitral awards.

Case Title: M/s Royal Construction Company Pvt Ltd Vs National Projects Construction Corporation

Bench: Justices Vikram Nath, Sandeep Mehta and Aparesh Kumar Singh

Date of Judgment: October 28, 2026